Vanguard has concocted a deceptively simple scheme for the venerable he who wishes to squirrel away funds for posterity. Its enterprise, draped in the guise of a fiduciary feast, offers clients the illusion of partnership through its meagre fees. Yet one suspects the real grandeeprt of the Matter is to ensure the investor partakes in the very stew of their capital, thus absolving the company of all blame should the market falter. The charm offends none; the fees frazzle fewer. A dashedly clever ploy, if one overlooks the faint scent of broken promises in the air.
The jade-starred quill of investment guidance often points to two humble acolytes-Vanguard Total Market Index (VTI) and Vanguard Total Bond Market ETF (BND). Together they form a delicate balance between adventure and prudence, like a pair of elderly twins at a tea party-one with a.toolStripButton, the other with a clotted cream bestrewn crumpet. Divide your £100 thusly: 60A for stocks, 40A for bonds, and call it quits while sipping a martini and pondering the merest hint of a stock tip from a ne’er-do-well stockbroker. Apropos of which, here’s why this alchemy of financial serendipity deserves your attention, if only to avoid the mortifying spectacle of watching your portfolio vanish into the night, à la a bankrupt baronet’s silverware.
The 60/40 Portfolio
Stocks, that most amusing of games where fortunes ebb and flow like a poorly tied shoelace, are a delight for the long-term lexicographer. However, to fling oneself entirely into their fray is to invite a rather unbecoming yearly tango with panic. Bonds, then, are the sensible chaperone one arranges for one’s younger self. Let us peruse the ledger of these annual flirtations, shall we?
| Portfolio Allocation | Best Annual Return | Worst Annual Return | Average Annual Return |
|---|---|---|---|
| 100% stocks/0% bonds | 54.2% | -43.1% | 10.5% |
| 80% stocks/20% bonds | 45.4% | -34.9% | 9.7% |
| 60% stocks/40% bonds | 36.7% | -26.6% | 8.8% |
| 50% stocks/50% bonds | 32.3% | -22.5% | 8.2% |
| 40% stocks/60% bonds | 27.9% | -18.4% | 7.7% |
| 20% stocks/80% bonds | 29.8% | -14.4% | 6.4% |
| 0% stocks/100% bonds | 32.6% | -13.1% | 5% |
The historical pearl of this permutation is the 60/40 marriage. An 8.8% annual average is rather charming, one must concede, and the volatility-though never quite tamed-does adopt a more decorous air in the company of such a sturdy bondhand. As the old proverb observes: “Madness and genius are but one dance away. Bonds, alas, may shorten the steps.”
Broad Exposure to the U.S. Stock Market
The Vanguard Total Stock Market ETF is the sort of fund that arrives with pockets full of empires. Its index, the CRSP US Total Market Index, is a sparkling ledger that includes every scribbled equity from major exchanges. Over 3,500 stocks in its care, though one might argue that it’s more of a zoo than a portfolio. The lion’s share? Naturally, the silicon-savvy titans: Nvidia (6.5%), Microsoft (6.1%), Apple (5.6%), Amazon (3.5%), and Meta Platforms (2.6%). A curious concentration in gentlemen of the keyboard, but such is the modern age.
Of course, one cannot fault the fund for its returns. The numbers speak so plainly, one suspects they’ve practised:
| Fund | 1-Year | 3-Year | 5-Year | 10-Year | Since Inception (5/24/2001) |
|---|---|---|---|---|---|
| VTI | 17.4% | 24% | 15.7% | 14.7% | 9.2% |
| Benchmark | 17.4% | 24.1% | 15.7% | 14.7% | 9.2% |
Its 0.03% fee is, of course, a mere pittance from the investor’s purse, unless one happens to be Sir Reginald Pymble, who once mistook a nickel for a sovereign. But let us not quarrel over pocket lint.
Broad Exposure to the U.S. Bond Market
If one must flirt with the realm of fixed income, the Vanguard Total Bond Market ETF is the reasonable partner who brings your hat pin when you forget it. It tiptoe-ticks through nearly 11,400 bonds, averaging buteight years in maturities. Much like a well-timed jest, it cushions the blows of stock market theatrics while gracing one with a modest dividend approximate four percent. A dash of stability, if one ignores the faint howl of the dwindling yield in recent epochs.
The 0.03% fee here is equally demure, though one wonders if it were a shilling more, would the fund still parade so proudly? The tables below, rather like a footman reading out the guest list, confirm this humble husbandry:
| Fund | 1-Year | 3-Year | 5-Year | 10-Year | Since inception (4/3/2007) |
|---|---|---|---|---|---|
| BND | 2.9% | 4.9% | -0.5% | 1.8% | 3.1% |
| Benchmark | 2.9% | 5% | -0.4% | 1.9% | 3.2% |
Such a performance, while not the stuff of which Shakespearean sonnets are made, possesses a tiresomely steadfast charm.
A Great Pairing
VTI and BND, you see, are the eccentrics at the dinner table-one with a cabinet of driverless cars, the other with a passion for cross-stitching futures contracts. Together, they form a most agreeable alliance between dear old Daisy Risk and dear old Barry Reward. The investor may sip their digestif, content that they have neither overreached nor entirely slept through the plot. One might imagine the Daily Telegraph receiving a letter, rather triumphantly, announcing, “My dear sir, that paragon of economic wisdom, the 60/40 plan, has once again left my ducks in a row.”
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2025-10-13 08:28